Provena Tax Exemption Stripped, Upheld By Illinois Supreme Court

Today, the Illinois Supreme Court ruled that Champaign County, Illinois officials were justified in their decision to dissallow the tax exemption of Downstate Provena Covenant Medical Center for not providing enough charity care to patients.

“In this decision, the Supreme Court upheld the denial of property-tax exemption for the tax year in question, agreeing with the appellate court that the record was inadequate to demonstrate that Provena was a charitable institution,” the Supreme Court said in a statement.

At issue was the level of charity care provided by the non-profit medical providers in exchange for tax exemptions.

In 2003, Champaign County, Illinois tax officials denied Provena its tax exemption.  The 210-bed hospital spent $831,724 on “charitable activities” a year earlier.  The Illinois Department of Revenue upheld that decision.

Provena sued to have its property tax exemption restored. A Sangamon County District Court sided with the hospital in 2007, but a state appellate court overturned that decision in 2008.

The hospital, which is owned by Provena Health, a six-hospital system based in south suburban Mokena, has been paying roughly $1 million a year in property taxes since the Champaign County took away its exemption in 2002.

Illinois law now requires hospitals to provide charity care to poor people to qualify for their tax exemption, but it doesn’t specify how much.  Attorney General Lisa Madigan has argued for a quantifiable benchmark that hospitals must clear to earn tax breaks. In 2006, she pushed for legislation that would require them to provide free or discounted medical care equal to 8% of their operating budgets. The bill did not become law. Federal law requires that hospitals meet a “community benefit” standard to qualify for tax exemption.  Under the law, hospitals cite costs such as training of medical students, research and community outreach, along with free care, as justification for their tax exemption.

DeBlasio Law Group, LLC founding member Antonio DeBlasio has litigated health care matters over the course of his career in federal court and in arbitration settings.